If you live in the US, then your state most likely sets compulsory minimums for your car insurance coverage. New Hampshire and Virginia are the only two states without minimum coverage requirements, and each still enforces strict liability on drivers who are responsible for accidents. Compulsory minimums vary by state, but they generally require coverage in two or three of the following categories:
All states with minimum coverage requirements stipulate bodily injury and property damage liability, but not all states require uninsured motorist coverage. While meeting the minimum requirements of your state will allow you to register and drive your car legally, there are compelling reasons to consider higher coverage limits.
Why Would You Want Higher Liability Coverage?
Bodily injury and property damage liability protects you if you are responsible for causing injuries or damage in an accident. In no-fault states, your coverage will kick in even if you are not at-fault for the accident, although you will not be responsible for any additional liability beyond the state's personal injury protection limits if you were not at fault for the accident. Coverage limits generally apply per accident for property damage and per accident and person for bodily injury coverage.
The compulsory minimum limits of most states are designed to cover relatively minor accidents. If you are involved in a more severe crash, it is easy to exceed these low limits. For example, the minimum property damage limits in most states are insufficient to cover the average value of a new car. Increasing coverage to at least $50,000 is often advisable, although $100,000 provides greater protection for multi-vehicle accidents or crashes involving high-end cars or non-vehicle property. Likewise, medical bills for serious accidents can often exceed $50,000.
When you are responsible for an accident, your income and your assets are at stake. If the other party attempts to recover damages, you can potentially lose your house or have your income garnished by a court judgment. Increasing your liability coverage helps to protect you against this eventuality, ensuring that your assets remain safe even if you are responsible for significant damage or injury.
Moving Beyond Liability Coverage
Liability coverage protects your assets, but it does not protect your property. No state requires collision or comprehensive coverage, but these coverage types may be mandatory if you lease or finance your car. Taking additional coverage may not make sense if the value of your vehicle is meager, but they are often worthwhile for higher-value cars. Comprehensive coverage is generally much cheaper than collision, so it can sometimes be a good idea to choose a very high collision deductible and a lower comprehensive deductible.
Ultimately, it is important to remember that car insurance coverage is there to protect you. By sticking to the mandatory state minimums, you expose yourself and your assets to greater risk while also doing nothing to protect your property. The relatively low cost of increased coverage is a small price to pay for peace of mind.
Share13 November 2019
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